2013 (1) TMI 329 - AT - Central Excise

Waiver of pre-deposit Inclusion of Pre-delivery inspection charges and after sales service into Transaction value - Appellant is engaged in the manufacture of automobiles Goods cleared from the factory to respective dealers on principal to principal basis - Excise duty paid on per price charge from the dealers Held that - As per agreement dealer is under obligation to provide free pre-delivery inspection and three free service given to customer. Appellant has a strong prima facie case which justifies waiver of condition of pre-deposit of duty demand, interest and penalty

Summary

Issues:
Waiver of pre-deposit of duty demand, interest, and penalty imposed by the impugned order.

Detailed Analysis:
The appellant, a manufacturer of automobiles, sold vehicles to dealers under dealership agreements. The Department contended that costs incurred by dealers for pre-delivery inspection and free services were to be included in the transaction value for excise duty calculation. A show cause notice was issued demanding duty, interest, and penalty. The Commissioner confirmed the duty demand and penalty. The appellant argued that the costs were included in the contract price, and no money flowed back from dealers to the appellant. Citing relevant judgments, the appellant sought waiver of pre-deposit.

The Revenue opposed the waiver, referring to a Larger Bench judgment that concluded charges for pre-delivery and after-sale services by dealers were to be included in the assessable value of cars. The appellant cleared cars to dealers on a principal-to-principal basis, subject to dealership agreements requiring free services. The Tribunal found that the expenses incurred by dealers for free services were not includible in the transaction value, aligning with Supreme Court judgments. The Larger Bench's attempt to distinguish previous judgments was deemed insufficient, and the Tribunal saw no reason not to follow the Apex Court's rulings.

Considering the appellant's strong prima facie case, the Tribunal waived the condition of pre-deposit of duty demand, interest, and penalty, staying the recovery. The appeal hearing was fast-tracked due to the significant duty amount involved. The judgment was pronounced in open court, with the next hearing scheduled for a specific date.

This detailed analysis of the judgment highlights the arguments presented by both parties, the legal interpretations applied, and the ultimate decision of the Tribunal to grant the waiver of pre-deposit based on the appellant's strong case and alignment with relevant legal precedents.